TIDMFUTR
RNS Number : 8020Z
Future PLC
18 May 2023
18 May 2023
FUTURE plc
2023 INTERIM YEAR RESULTS
Diversification strategy delivers solid results
Future plc (LSE: FUTR, "Future", "the Group"), the global
platform for specialist media, today publishes its results for the
half-year ended 31 March 2023.
Highlights
Financial results for the half-year ended 31 March 2023
Adjusted results (1) HY 2023 HY 2022 Var
-------- -------- -------
Adjusted operating profit (GBPm) 130.3 134.5 (3)%
---------------------------------- -------- -------- -------
Adjusted operating profit margin
(%) 32% 33% (1)ppt
---------------------------------- -------- -------- -------
Adjusted diluted EPS (p) 71.2 81.3 (12)%
---------------------------------- -------- -------- -------
Adjusted free cash flow(3) 130.0 137.8 (6)%
---------------------------------- -------- -------- -------
Statutory results HY 2023 HY 2022 Var
---------------------------------- -------- -------- -------
Revenue (GBPm) 404.7 404.3 -
---------------------------------- -------- -------- -------
Operating profit (GBPm) 83.9 88.4 (5)%
-------- -------- -------
Profit before tax (GBPm) 66.4 81.0 (18)%
-------- -------- -------
Cash generated from operations
(GBPm) 117.3 138.1 (15)%
-------- -------- -------
Diluted EPS (p) 46.7 51.7 (10)%
---------------------------------- -------- -------- -------
Financial highlights
-- Performance in the half was in line with management
expectations with revenue flat year-on-year to GBP404.7m (HY 2022:
GBP404.3m) with the contribution from acquisitions and favourable
foreign exchange offsetting the expected organic(2) decline.
Organic(2) revenue was down (10)% reflecting the challenging
macroeconomic backdrop, including audience decline in our markets,
but with progress on the execution of the strategy, notably in
Fashion & Beauty, Homes, and eCommerce Affiliates services,
driving improved monetisation.
-- Despite the adverse revenue mix and cost inflation, the
Group's cost agility and platform effect protected profitability
with adjusted(1) operating profit margin of 32%, down (1)ppt
year-on-year (HY 2022: 33%). Inflationary pressures in HY 2023 were
equivalent (1)ppt or GBP(8)m and adverse mix, equivalent (1)ppt of
adjusted operating profit margin, with statutory operating profit
margin at 21% down (1)ppt (HY 2022: 22%).
-- Adjusted(1) operating profit declined only (3)% to GBP130.3m
(HY 2022: GBP134.5m) with the top line organic(2) decline partly
mitigated by cost saving initiatives and on track to deliver
further benefits in the second half. Statutory operating profit was
down (5)% to GBP83.9m (HY 2022: GBP88.4m).
-- The Group remains highly cash generative with adjusted free
cash flow(3) of GBP130.0m (HY 2022: GBP137.8m), representing 100%
of adjusted(1) operating profit (HY 2022: 102%). Cash generated
from operations was GBP117.3m (HY 2022: GBP138.1m).
-- Leverage(4) reduced to 1.41x (FY 2022: 1.48x) after three
additional acquisitions. This reflects continued rapid de-levering,
resulting in net debt at the end of the half-year of GBP390.9m (FY
2022: GBP423.6m). Total debt facilities at the end of March 2023
were GBP900m.
Operational and strategic highlights
-- Leadership positions progress
-- Our leadership positions enable premium monetisation through
improved revenue per user and resilience
-- The Group maintained or improved leadership positions(5) within key verticals
-- Maintained - Consumer technology #1 in the US and UK
-- Entered - Fashion & Beauty #7 in the US, #4 in the UK
-- Progress - Homes #4 in the US, #1 in the UK
-- Diversifying and growing monetisation
-- Diversification of audiences with almost half of our audience
coming from outside online users
-- Diversification of revenue with:
-- Rollout of proprietary voucher code technology on content websites
-- Launch of new strategic initiative of eCommerce affiliate services on Wealth content
These new initiatives will further diversify our revenue streams
in affiliates and underpin future growth
-- Continued premiumisation of the fashion and beauty audience
with 2% organic(2) media revenue growth in Women's lifestyle
vertical and strong performance of recently acquired Who What Wear
brand
-- More direct and high-value campaigns driving yield resilience
in advertising and demonstrating the value of our audiences
-- Maximising value through efficient capital allocation
-- Accelerating the execution of our strategy with value
creating acquisitions is a key part of our capital allocation
-- Three acquisitions completed since October 2022, adding
capability in B2C and B2B at attractive multiples
Outlook
-- The flexibility and diversification of our business model
continues to allow us to navigate the tougher macroeconomic
backdrop.
-- As we look to the second half, we expect the first half
trends to continue; with challenging market conditions, impacting
audience.
-- Additionally, we are investing to support US growth opportunities.
-- As a result, we expect full year performance to be towards
the bottom end of current market expectations.
-- Longer-term, we are confident that our diversified strategy
will continue to deliver significant value for shareholders, with
our investment in new content verticals and capabilities
underpinning our growth ambitions.
Jon Steinberg, Future's Chief Executive, said:
"I am excited to have joined Future and by the significant
opportunity to build on the unique position it has in the digital
media landscape.
"In my first six weeks I have been extremely impressed with the
depth of talent and energy throughout the organisation and, looking
ahead, my priorities will be to further enhance our brand
leadership positions, continue to diversify and grow our
monetisation opportunities, and maximise value for all our
stakeholders.
"The macroeconomic environment remains tough, but we are well
positioned to continue to outperform the industry. Our investment
in new strategic verticals, coupled with the Group's tech stack and
operating model, will create long-term value for our
stakeholders."
Presentation
A live webcast of the analyst presentation will be available at
09.00 am (UK time) today at
https://stream.brrmedia.co.uk/broadcast/6436d35e30f1081a33efe79a
A copy of the presentation will be available on our website at:
https://www.futureplc.com/investor-results/
A recording of the webcast will also be made available.
The definitions below apply throughout the document.
1) Adjusted results are adjusted to exclude share-based payments
(relating to equity settled share awards with vesting periods
longer than 12 months) and associated social security costs,
acquisition and integration related costs, exceptional items,
amortisation of intangible assets arising on acquisitions,
unwinding of discount on contingent consideration, and any related
tax effects. A reconciliation between adjusted and statutory profit
is shown in note 1.
2) Organic growth is defined as the like for like portfolio in
the period, including the impact of closures and new launches but
excluding HY 2022 acquisitions which have not been acquired for a
full financial year and HY 2023 acquisitions, and at constant FX
rates. Constant FX rates is defined as the average rate for HY
2023.
3) Adjusted free cash flow is defined as adjusted operating cash
flow less capital expenditure. Capital expenditure is defined as
cash flows relating to the purchase of property, plant and
equipment and purchase of computer software and website
development. Adjusted operating cash flow represents cash generated
from operations adjusted to exclude cash flows relating to
acquisition and integration related costs, exceptional items and
payment of accrual for employer's taxes on share-based payments
relating to equity settled share awards with vesting periods longer
than 12 months, and to include lease repayments following adoption
of IFRS 16 Leases. Adjusted free cash flow conversion reflects
adjusted free cash flow as a percentage of adjusted operating
profit.
4) Leverage is defined as Net debt as defined below (excluding
capitalised bank arrangement fees and lease liabilities, and
including any non-cash ancillaries), as a proportion of Adjusted
EBITDA and including the 12 month trailing impact of acquired
businesses (in line with the Group's bank covenants definition).
Adjusted EBITDA is defined as earnings less interest, tax,
depreciation and amortisation and also adjusted for the items
referenced above where applicable.
5) Comscore Media Metrix Demographic Profile, March 2023 -
Desktop Age 2+ and Total Mobile 18+ US and UK
6) Online users defined as monthly online users from Google
Analytics and, unless otherwise stated, is the monthly average over
the financial period and excludes Gardening Know How. Forums are
excluded as they are non-commercial websites for which Future does
not write content, and are not actively managed or monetised.
7) Proforma numbers compare at constant exchange rates the
performance of acquisitions on a like-for-like (as defined above in
organic growth definition) basis.
8) Reference to 'core or underlying' reflects the trading
results of the Group without the impact of amortisation of acquired
intangible assets, acquisition and integration related costs,
exceptional items, share-based payment expenses (relating to
equity-settled share awards with vesting periods longer than 12
months), together with associated social security costs, unwinding
of discount on contingent consideration, and any tax related
effects that would otherwise distort the users understanding of the
Group's performance. The Directors believe that adjusted results
provide additional useful information on the core operational
performance of the Group, and review the results of the Group on an
adjusted basis internally.
9) Net debt is defined as the aggregate of the Group's cash and
cash equivalents and its external bank borrowings net of
capitalised bank arrangement fees. It does not include lease
liabilities recognised following the adoption of IFRS 16
Leases.
10) Apple News users are users as accounted by Apple on iCloud
for March 2023.
Enquiries:
Future plc
Jon Steinberg, Chief Executive Officer +44 (0)122 544 2244
Penny Ladkin-Brand, Chief Financial and Strategy
Officer
Marion Le Bot, Head of Investor Relations +44 (0)777 564 1509
Media
Headland +44 (0)203 805 4822
Stephen Malthouse, Rob Walker, Charlie Twigg
future@headlandconsultancy.com
About Future
Future is a digital-first global platform for intent-led
specialist media. Underpinned by leading technology and enabled by
data, we operate c.250 brands in diversified content verticals,
across our B2C and B2B divisions with multiple market leading
positions and three core monetisation frameworks: advertising,
eCommerce affiliate and direct consumer monetisation. We organise
our brands by specialist interest and have four main content
verticals with 16 subcategories ranging from Consumer Technology
and Home to Wealth and Women's Lifestyle. Our content is published
and distributed through a range of formats including websites,
email newsletters, videos, magazines and live events. The
successful execution of our strategy is focused on three pillars:
organic growth, the platform effect and value-creating M&A.
Strategic and operational update
Future is a digital-first global platform for intent-led
specialist media underpinned by technology, enabled by data with
diversified revenue streams. The business model has a strong track
record of driving consistent, high-quality profit growth which
translates into strong operating margin and cash. Future's strategy
is to grow relevant and valuable audiences to maintain or gain
leadership positions in each of the markets it operates in, whilst
diversifying and growing the monetisation of these audiences.
By obtaining leadership positions, we become a must-have
partner, enabling strong advertising yields and affiliate
commissions with resilience through economic cycles. This
resilience is reinforced by the diversified nature of the Group,
both from content verticals, geographical locations and different
revenue streams.
We are focused on profitable organic growth to drive long-term
value through operating leverage and excellent cash conversion. The
strategy is accelerated with acquisitions. Acquisitions are
integrated in full, deploying our operating model including our
global approach to our content, our technology platform and our
audience reach, driving further the Platform Effect.
We have a relentless focus on the sustainable execution of our
strategy. This focus translates into a repeatable, efficient value
creation model as highlighted by our exceptional track record.
Grow relevant and valuable audiences
Our first strategic objective is to meet the needs of our
audience. We are a trusted expert, helping our audiences do the
things they love, from which graphic cards to use to understanding
taxes for the self-employed. Our goal is to be the leader in the
markets in which we operate as this provides the ability to drive
greater revenue from the audience at higher yields and
resilience.
As anticipated, the wider market slowdown in audience numbers
outlined in our last trading update has continued. Despite this, we
have maintained or improved leadership positions within key
verticals.
In the US, we have maintained our leadership position in
Technology, our most impacted vertical, where, as expected, we are
seeing users decline year-on-year driven by market dynamics with
limited new products being launched and brought forward purchases
during the pandemic combined with challenges in TechRadar including
the impact of the Google algorithm change. In Fashion & Beauty,
we are now #7, this performance is underpinned by strong growth in
Marie Claire and the inclusion of Who What Wear. In Homes, we are
now #4 with the inclusion of Gardening Know How and very strong
performance in the legacy portfolio. In Wealth, Kiplinger is
performing well with a focus on expert content to build out the
foundations for growth.
In the UK, we have also maintained our leadership position in
Technology although we have experienced users decline, along with
the wider market. We are now #4 in Fashion & Beauty. We remain
#1 in Homes with continued growth and our biggest site, Homes &
Gardens, has grown by over 30% on Comscore.
We continue to progress on our audience diversification journey
with a focus on increasing reach in diversified channels as well as
verticals. However, online users in the period were challenged with
users down (19)% on a reported basis and (23)% on an organic basis.
The large majority of this change is in our GETs vertical, impacted
by the previously mentioned pressures in the consumer technology
markets. This has been coupled with the impact of a Google
algorithm change which has impacted the market, including some of
our larger sites, driving the Group's number. However, we continue
our medium term goal of diversifying our audience sources with a
particular focus on direct to consumer. Good examples of our
progress in this area are that we have increased our newsletter
subscribers, a very valuable audience, by 52% to over 15m
subscribers and our permissioned Go.Compare subscribers have
increased double digit to 4m. We have also increased audience by
scaling in Apple News(10) which brought 10m users in the month of
March 2023. We continue to see Apple News as a diversified source
of audience, in line with our strategy. Social followers are also
up +34% to over 180m (HY 2022: 135m), benefiting from the addition
of Who What Wear and up 2m since FY 2022.
Driving audience is a blend of art and science. The art is
delivered by our expert editorial teams who thrive in responding to
audience demands for relevant, useful and engaging content (both
online and in print). The science is brought by our ability to use
data, analytics and artificial intelligence. The combination allows
us to reach high-intent audiences at scale, providing a brand-safe
qualified audience for advertisers and responding to eCommerce
demand.
Diversify and grow monetisation
The second strategic objective of the Group is to diversify and
grow monetisation; that is, to increase the revenue from our
audiences. The diversification of revenue streams enables the Group
to continue to deliver despite challenging market conditions. For
example, in the period we benefited from growing demand in our
Wealth & Savings vertical, including our price comparison
business, whilst digital revenue and affiliates for products, along
with the wider market, were impacted by macroeconomic conditions.
The Wealth & Savings audience is the most valuable of the
consumer audiences in the Group and provides a favourable mix to
our monetisation.
Growth in revenue is driven by a combination of a content-led
approach to increase audiences, with a focus on achieving market
leadership positions allowing premium pricing, as well as
increasing revenue per user by adding new routes of monetisation.
In the period, the Women's Lifestyle portfolio was the most
valuable digital advertising audience per user of the Group. This
is in part as a result of the Who What Wear acquisition which
brought in a strong sales team who are helping to generate strong
revenues both from the acquired but also from the organic Women's
Lifestyle and Homes audience in the US.
During the period, we continued the rollout of Eagle, our
proprietary voucher technology, which went live on Tom's Guide as
the first site last year. Tom's Guide vouchers are continuing to
display strong results 9 months after the deployment. We are in the
process of rolling out this technology to all of our main content
sites and expect to be live on 12 sites by the end of the year
which we see as an important driver of future revenue growth.
Our key content verticals are at different levels of
monetisation with newer verticals such as Women's Lifestyle and
Wealth representing the greatest opportunities, both through
audience growth and also increasing advertising yields and adding
new revenue streams.
The Platform Effect drives sustained strong operating margin
The Platform Effect is more than operating leverage and growing
the bottom line, it is about the multiplier impact of the organic
and inorganic capabilities that deliver unique value creation, in
both revenue and profit.
Our financial results evidence our successful and diversified
monetisation model as well as our ability to deploy the Future
operating model to drive scalability and operating leverage.
Despite the macroeconomic backdrop impacting revenue as well as the
wider inflationary pressures, the flexibility of our cost base
helped to deliver a robust adjusted operating profit margin of 32%.
This was achieved whilst continuing to invest for growth, notably
with some senior US sales hires in the half. To ensure we navigate
the short-term as well as invest for the long-term, we continue to
invest in technology across the portfolio and focus on increasing
efficiency in centres of excellence.
We believe our proprietary technology platform is a key source
of competitive advantage. The benefit of having a common platform
translates into our ability to leverage the benefit of continuous
investment rapidly across our estate. We now have a total of 51
sites on the Vanilla website platform (FY 2022: 52). During the
half, we further deployed our voucher code technology to nine
websites, allowing a new affiliate revenue stream on these sites.
We also continued to enrich our data audience platform Aperture and
its activations to produce high-value advertising segments and we
invested in insight on content writing with SmartPublishing using
our proprietary AI-enabled tool.
Content is at the heart of our purpose and we continuously
invest in content creation to ensure we remain the trusted,
authoritative expert for our audiences. Editorial is our biggest
team with over 1,300 editorial colleagues. Quality, expert,
intent-led content is also a source of operating leverage with a
significant percentage of our revenue from content being produced
in the prior periods.
Our centres of excellence reduce duplication and provide access
to talent in locations with a lower cost of living, delivering
efficiency of spend and agility in an ever-changing landscape.
During the half, we have made New York our US hub with the majority
of our employees working remotely, driving facilities cost savings.
In the UK, we opened a new office in Cardiff which now hosts over
200 employees, and leverages the proximity to graduate talent in an
affordable city location.
Efficient capital allocation
Whilst accelerating the execution of our strategy with value
creating acquisitions is a key part of our capital allocation, we
recognise the higher-interest rate environment and our own
valuation. We have updated our hurdle rate for acquisitions to
reflect these factors and whilst this raises the bar for
value-creating M&A, the pipeline remains active with market
pricing starting to reflect the current environment. However, to
the extent that we are unable to execute on such transactions, we
would look to deploy our excess free cashflow in returning cash to
shareholders.
We remain highly disciplined when it comes to acquisitions with
25 deals reviewed for each transaction that we executed in the past
6 months, as we rigorously ensure that each acquisition meets our
investment objectives.
Shortlist
On 18 October 2022, we completed the acquisition of
Shortlist.com, a technology website, for GBP0.2m. We are deploying
our tech stack to the website to drive monetisation, whilst growing
our online users and accelerating this growth through our
capabilities. Shortlist is now fully integrated into the Group.
ActualTech
On 30 November 2022, the Group completed the acquisition of
ActualTech, a provider of content marketing solutions for B2B
marketers, funded from the Group's existing debt facilities for an
initial enterprise value of $36m or 6.6x 2022 EBITDA pre-synergies
. In addition, a further variable deferred consideration up to a
total value of $24m could be paid, subject to meeting certain
financial targets based on the 12 month period ending 31 December
2023. ActualTech specialises in webinars, white papers, syndication
and content marketing on owned platforms. The acquisition further
diversifies the Group by strengthening Future's position in the B2B
vertical and provides greater scale and reach in North America to
further monetise its highly-valuable B2B audience. In addition, the
Group will be leveraging ActualTech's webinar capabilities and its
US expertise within the Group's existing portfolio. The initial
integration has been completed with the full integration expected
by the end of the earnout period in December 2023. In the period,
ActualTech has delivered strong revenue results creating operating
leverage.
Gardening Know How
On 7 February 2023, the Group completed the acquisition of
Gardening Know How, a US Homes website for an enterprise value of
$17m or 6.3x 2022 EBITDA. The nature of gardening means that
content is very evergreen driving a strong return on editorial
investment. This acquisition strengthens our strategic Homes
vertical by increasing our position within Comscore and will
benefit from our operating model including our proprietary tech
stack. The integration is well-underway and performance is very
promising at this early stage.
Execution underpinned by values
Future operates as a purpose-driven organisation creating value
for all stakeholders. Our strategy is to operate as a responsible
business and everything we do is underpinned by our purpose and
values which fosters an aligned culture across the organisation. We
are extremely fortunate that our brands give us the platform and
opportunities to influence and inspire people across the globe to
encourage positive change.
We remain proud of and thankful to our colleagues for their hard
work and ongoing support in these continued challenging times.
Executive changes
Following the announcement on 22 February 2023, Jon Steinberg
joined the Group as CEO on 3 April 2023.
Outlook
-- The flexibility and diversification of our business model
continues to allow us to navigate the tougher macroeconomic
backdrop.
-- As we look to the second half, we expect the first half
trends to continue; with challenging market conditions, impacting
audience.
-- Additionally, we are investing to support US growth opportunities.
-- As a result, we expect full year performance to be towards
the bottom end of current market expectations.
-- Longer-term, we are confident that our diversified strategy
will continue to deliver significant value for shareholders, with
our investment in new content verticals and capabilities
underpinning our growth ambitions.
Financial summary
The financial summary is based primarily on a comparison of
results for the period ended 31 March 2023 with those for the
period ended 31 March 2022. Unless otherwise stated, change
percentages relate to a comparison of these two periods. Organic
growth is defined as the like for like portfolio in the period,
including the impact of closures and new launches but excluding HY
2022 acquisitions which have not been acquired for a full financial
year and HY 2023 acquisitions, and at constant FX rates. Constant
FX rates is defined as the average rate for HY 2023.
HY 2023 HY 2022
GBPm GBPm
-------------------------------------- -------- --------
Revenue 404.7 404.3
-------------------------------------- -------- --------
Adjusted operating profit 130.3 134.5
Adjusted profit before tax 113.1 127.1
-------------------------------------- -------- --------
Operating profit 83.9 88.4
Profit before tax 66.4 81.0
-------------------------------------- -------- --------
Basic earnings per share (p) 46.9 52.5
Diluted earnings per share (p) 46.7 51.7
Adjusted basic earnings per share (p) 71.7 82.7
Adjusted diluted earnings per share
(p) 71.2 81.3
-------------------------------------- -------- --------
The Directors believe that adjusted results provide additional
useful information on the core operational performance of the
Group, and review the results of the Group on an adjusted basis
internally. See the section below for a reconciliation between
adjusted and statutory results.
A reconciliation of adjusted operating profit to profit before
tax is shown below:
HY 2023 HY 2022
GBPm GBPm
-------------------------------------------------- -------- --------
Adjusted operating profit 130.3 134.5
Adjusted net finance costs (17.2) (7.4)
Adjusted profit before tax 113.1 127.1
Adjusting items:
Share-based payments (including social
security costs) (7.0) (3.7)
Acquisition and integration related costs (note
4) (3.2) (10.6)
Exceptional items (note 5) (5.9) (1.6)
Amortisation of acquired intangibles (30.3) (30.2)
Unwinding of discount on contingent consideration (0.3) -
Profit before tax 66.4 81.0
-------------------------------------------------- -------- --------
Revenue
Revenue HY 2023 HY 2022 YoY Var Organic
GBPm GBPm YoY Var
--------------------- -------- -------- -------- ---------
Advertising & other 87.7 77.7 +13% (22)%
--------------------- -------- -------- -------- ---------
Affiliates 39.0 42.3 (8)% (24)%
--------------------- -------- -------- -------- ---------
Magazines 40.1 34.4 +17% +3%
--------------------- -------- -------- -------- ---------
Total US 166.8 154.4 +8% (17)%
--------------------- -------- -------- -------- ---------
Advertising & other 44.3 42.1 +5% (2)%
--------------------- -------- -------- -------- ---------
Affiliates 94.5 96.5 (2)% (2)%
--------------------- -------- -------- -------- ---------
Magazines 99.1 111.3 (11)% (7)%
--------------------- -------- -------- -------- ---------
Total UK 237.9 249.9 (5)% (5)%
--------------------- -------- -------- -------- ---------
Total revenue 404.7 404.3 - (10)%
--------------------- -------- -------- -------- ---------
Group revenue was flat year-on-year in the period to GBP404.7m
(HY 2022: GBP404.3m), with the benefit of acquisitions and foreign
exchange translation offsetting organic decline (decline of (10)%
at constant currency and (5)% at actual currency). HY 2022
acquisitions which have not been acquired for a full financial year
and HY 2023 acquisitions contributed GBP20.3m to revenue in the
period and includes revenue from WhatCulture, Who What Wear,
Shortlist, ActualTech and Gardening Know How.
UK revenue declined by (5)% or GBP(12.0)m to GBP237.9m (HY 2022:
GBP249.9m). Total UK organic revenues declined (5)% with (2)%
organic revenue decline in Media and (7)% in Magazines. UK Media
organic decline was driven by a (5)% decline in digital advertising
and other media increased by +8% driven by strong events. The
relatively stronger UK performance demonstrates how leadership
creates resilience, notably through a better video and direct
advertising mix. Affiliate revenue was also down (2)% benefiting
from a high mix of price comparison revenue which grew by +4%.
Performance was weaker in the US driven by the unfavourable mix
(less Magazines and no price comparison) offset by the benefit of
acquisitions, notably Who What Wear and ActualTech, driving
reported revenue growth of +8% or GBP12.4m to GBP166.8m (HY 2022:
GBP154.4m). Organic growth was down (17)% with (22)% decline in
digital advertising and other Media and (24)% in affiliates, offset
by +3% growth in Magazines notably in subscriptions.
Revenue HY 2023 HY 2022 YoY Var Organic
GBPm GBPm YoY Var
--------------------- -------- -------- -------- ---------
Advertising & other
media 132.0 119.8 +10% (15)%
--------------------- -------- -------- -------- ---------
Affiliates 133.5 138.8 (4)% (10)%
--------------------- -------- -------- -------- ---------
Total Media 265.5 258.6 +3% (12)%
--------------------- -------- -------- -------- ---------
Total Magazines 139.2 145.7 (4)% (5)%
--------------------- -------- -------- -------- ---------
Total revenue 404.7 404.3 - (10)%
--------------------- -------- -------- -------- ---------
Media revenue increased by GBP6.9m or +3% but declined
organically by (12)% to GBP265.5m (HY 2022: GBP258.6m).
Organic digital advertising revenue declined by (18)% despite
improved monetisation due to the impact of lower online audiences.
Importantly, the yield has remained very resilient as a result of
the quality of our audience, and a favourable mix with more direct
advertising. This demonstrates the Group's ability to deliver
valuable audiences to advertisers. Other media revenue increased
+6% organically driven by a strong +16% organic growth in events
with key successful events such as Women in Music Awards and Home
Building and Renovating shows.
Organic affiliate revenue was down (10)%, with the growth in
price comparison and vouchers partially offsetting the decline in
products. This performance highlights the benefit of the strategy
of diversification. In Affiliate products, whilst we have seen an
improvement in newer verticals such as Fashion & Beauty and
Wealth, we have been impacted by the macroeconomy through lower
demand as seen in the lower audience numbers. This decline was
particularly strong in the Consumer Technology vertical,
correlating with the performance of hardware manufacturers. In our
Price Comparison business, we have made further progress in the
diversification of our Go.Compare revenue with 35% of the revenue
in our diversified growth verticals (outside of car insurance),
+3ppt year-on-year. We have had strong performance in home, travel,
and pet insurance.
Magazine revenue declined by GBP(6.5)m or (4)% to GBP139.2m (HY
2022: GBP145.7m). Magazine organic revenue was down (5)%
year-on-year, an improvement on the secular decline rate we have
been experiencing historically. Subscriptions experienced a (5)%
organic decline in the legacy portfolio as customers unsubscribed
from pandemic subscriptions. Subscriptions now represent 48% of the
Magazines revenue, providing a robust source of recurring revenue.
The rest of the magazine portfolio was down (4)% organically. This
resilience was driven by the strength of our brands which are
highly specialist and touch people's passions.
Revenue HY 2023 HY 2022 YoY Var Organic
GBPm GBPm YoY Var
----------------------------------- -------- -------- -------- ---------
Games, Entertainment & Technology
(GETs) 135.6 156.0 (13)% (20)%
----------------------------------- -------- -------- -------- ---------
Lifestyle, Knowledge & News
(LKN) 132.4 112.1 +18% (2)%
----------------------------------- -------- -------- -------- ---------
Wealth & Savings (W&S) 97.1 93.6 +4% +1%
----------------------------------- -------- -------- -------- ---------
B2B & other 39.6 42.6 (7)% (12)%
----------------------------------- -------- -------- -------- ---------
Total revenue 404.7 404.3 - (10)%
----------------------------------- -------- -------- -------- ---------
GETs revenue benefited from the acquisitions of WhatCulture and
Shortlist. On an organic basis, as previously mentioned, revenue
was impacted by lower online users and market challenging
conditions notably in Consumer Technology.
LKN revenue benefited from the acquisition of Who What Wear and
had a resilient organic performance driven by a favourable mix of
Magazines combined with progress on monetisation in Media.
W&S organic revenue benefited from growth in the price
comparison business and US subscription business partially offset
by decline in the UK subscription business and overall digital
advertising.
B2B and other revenue was impacted by market conditions.
Operating profit
Cost of sales has increased year-on-year driven by inflation,
mostly in magazines with increases to paper and printing costs due
to high energy prices as well as the inclusion of acquisitions and
their respective costs. Other costs have increased due to the
inclusion of acquisitions and their respective costs as well as
inflationary pressures on salary and wages. These cost increases
(translating into a (1)ppt impact of the adjusted operating margin)
have been partially offset by cost saving initiatives around
offices, staff location and re-prioritisation of investment. As a
result, the Group adjusted operating profit margin has only
declined by (1)ppt to 32% (HY 2022: 33%), despite a (1)ppt headwind
from adverse mix with lower revenue decline in lower gross
contribution Magazines business compared to Media business. This is
a testament of the strength of the platform and the cost agility of
the Group, even in the challenging macroeconomic environment. As a
result, adjusted operating profit decreased by GBP(4.2)m to
GBP130.3m (HY 2022: GBP134.5m) with organic profit performance
partially offset by contributions from acquisitions. Statutory
operating profit decreased by GBP(4.5)m to GBP83.9m (HY 2022:
GBP88.4m) and statutory operating margin decreased by (1)ppt to 21%
(HY 2022: 22%) driven by the performance in adjusted operating
profit, and includes GBP5.3m of restructuring costs approaching
completion.
Earnings per share
HY 2023 HY 2022
---------------------------------------------- -------- --------
Basic earnings per share (p) 46.9 52.5
Adjusted basic earnings per share (p) 71.7 82.7
Diluted earnings per share (p) 46.7 51.7
Adjusted diluted basic earnings per share (p) 71.2 81.3
---------------------------------------------- -------- --------
Basic earnings per share is calculated using the weighted
average number of ordinary shares in issue during the period of
120.1m (HY 2022: 120.5m).
Adjusted earnings per share is based on profit after taxation
which is then adjusted to exclude share-based payments (relating to
equity-settled share awards with vesting periods longer than 12
months) and associated social security costs, acquisition and
integration related costs, exceptional items, amortisation of
intangible assets arising on acquisitions, unwinding of discount on
contingent consideration, and any related tax effects. Adjusted
profit after tax was GBP86.1m (HY 2022: GBP99.6m).
Acquisition and integration related costs
Acquisition and integration related costs of GBP3.2m incurred in
the period reflect GBP1.2m of deal-related fees, GBP0.8m of
restructuring costs related to recent acquisitions and GBP2.0m net
onerous property costs relating to recently acquired properties,
net of GBP0.8m released following settlement of a provision for
historic legal claims recognised on the Dennis opening balance
sheet (HY 2022: GBP1.7m relating to the Dennis acquisition and
GBP8.9m to onerous properties). Note 4 to the financial statements
provides further detail.
Exceptional items
Exceptional costs incurred in the period include GBP5.3m
relating to restructuring costs (HY 2022: GBP0.5m) and GBP0.6m
relating to onerous properties (HY 2022: GBP1.1m). Note 5 to the
financial statements provides further detail.
Other adjusting items
Amortisation of acquired intangibles of GBP30.3m (HY 2022:
GBP30.2m) includes amortisation arising from the in-year
acquisitions of ActualTech and Gardening Know How and the
acquisition of Dennis in FY 2022.
Share-based payment expenses (relating to equity-settled share
awards with vesting periods longer than 12 months), together with
associated social security costs increased by GBP3.3m to GBP7.0m
(HY 2022: GBP3.7m). The nature of the all-employee Value Creation
Plan scheme means that a charge is booked irrespective of the
likelihood of achieving the vesting targets.
Net finance costs and refinancing
In November 2022, the Group secured a new facility of GBP400m
with a syndicate of banks and supported by a partial guarantee from
UK Export Finance (UKEF), with attractive terms. As at 31 March
2023 the Group total committed facilities were GBP900m.
Net finance costs increased to GBP17.5m (HY 2022: GBP7.4m) which
includes external interest payable of GBP13.9m reflecting the
utilisations of the Group's debt facilities to fund the ActualTech
and Gardening Know How acquisitions, and higher interest rates;
GBP2.0m in respect of the amortisation of arrangement fees relating
to the Group's bank facilities; and GBP0.3m unwinding of discount
on contingent consideration relating to the ActualTech acquisition.
A further GBP1.4m of interest was recognised in relation to lease
liabilities (offset by GBP0.1m of interest income on sublet
properties).
Leverage at 31 March 2023 was 1.41 times, down from 1.48 times
at 30 September 2022, demonstrating the Group's ability to continue
to de-lever quickly.
A derivative interest rate swap for GBP150m was acquired in
March 2023 in order to hedge the Group's exposure to interest rate
fluctuations. The swap is at an interest rate of 3.72% and expires
on 24 March 2026.
Taxation
The tax charge for the six months ended 31 March 2023 is based
on the statutory tax rate estimated on a full year basis being
applied to the statutory profit for the six months ended 31 March
2023. The Group adjusted effective tax rate is 23.9% (HY 2022:
21.6%).
The Group's statutory tax rate is estimated to be 15.1% (HY
2022: 21.9%) with the difference between the statutory tax rate and
adjusted effective tax rate attributable to the tax effect of share
based payment charges which are recognised in equity.
For FY 2023, the Group expects the adjusted effective tax rate
to be 23.9%.
Balance sheet
Property, plant and equipment decreased by GBP15.5m to GBP37.5m
in the period (FY 2022: GBP53.0m) primarily reflecting the
write-down of right-of-use assets and leasehold improvements on
onerous properties of GBP10.1m, primarily attributable to property
leases inherited via the acquisition of Dennis (included within
acquisition and integration related costs) and depreciation of
GBP4.8m, offset by capital expenditure of GBP6.2m.
Intangible assets increased by GBP56.4m to GBP1,659.4m (FY 2022:
GBP1,715.8m) mainly reflecting the in-year acquisitions of
ActualTech and Gardening Know How (GBP48.8m) and capitalisation of
website development costs (GBP5.1m) offset by amortisation
(GBP37.1m) and the impact of FX (GBP(73.4)m).
Trade and other receivables decreased by GBP21.6m to GBP112.7m
(FY 2022: GBP134.3m) primarily driven by improved cash collection
during the period together with the impact of FX.
Trade and other payables inclusive of deferred income decreased
by GBP22.9m to GBP176.7m (FY 2022: GBP199.6m) primarily driven by
the payment of the FY 2022 profit pool bonus in the period, a focus
on timely payments as well as the impact of FX. Provisions
decreased by GBP13.8m, primarily due to payment of GBP8.9m for
settlement of the provision for historic legal claims recognised on
the Dennis opening balance sheet .
Cash flow and net debt
Net debt at 31 March 2023 was GBP390.9m (FY 2022: GBP423.6m, HY
2022: GBP388.7m) reflecting the ActualTech and Gardening Know How
acquisitions, offset by strong cash generation.
During the period, there was a cash inflow from operations of
GBP117.3m (FY 2022: GBP268.5m, HY 2022: GBP138.1m) reflecting
strong cash generation. Adjusted operating cash inflow was
GBP136.2m (HY 2022: GBP144.0m). A reconciliation of cash generated
from operations to adjusted free cash flow is included below:
HY 2023 HY 2022
GBPm GBPm
-------------------------------------------------- -------- --------
Cash generated from operations 117.3 138.1
Cash flows related to acquisition and integration
related costs 12.7 3.7
Cash flows related to exceptional items 8.9 3.5
Settlement of social security costs on share
based payments(1) 0.4 1.8
Lease payments following adoption of IFRS 16
Leases (3.1) (3.1)
-------------------------------------------------- -------- --------
Adjusted operating cash inflow 136.2 144.0
Cash flows related to capital expenditure (6.2) (6.2)
-------------------------------------------------- -------- --------
Adjusted free cash flow 130.0 137.8
-------------------------------------------------- -------- --------
(1) Relating to equity-settled share awards with vesting periods
longer than 12 months.
Other significant movements in cash flows include GBP6.2m (HY
2022: GBP6.2m) of capital expenditure, acquisitions totalling
GBP44.0m (HY 2022: GBP14.6m), net repayment of bank loans and
overdraft (net of arrangement fees) of GBP15.7m (HY 2022: net
repayment of GBP388.9m), acquisition of own shares of GBP7.8m (HY
2022: GBPnil), lease payments of GBP3.1m (HY 2022: GBP3.1m) and the
balance reflecting the Group's strong cash generation. The Group
paid a dividend in the period of GBP4.1m (HY 2022: GBP3.4m).
Foreign exchange and other movements accounted for the balance of
cash flows.
Adjusted free cash flow increased to GBP130.0m (HY 2022:
GBP137.8m), representing 100% of adjusted operating profit (HY
2022: 102%), reflecting the ongoing efficient cash management by
the Group.
Going concern
The Group has produced forecasts for the next 18 months from the
balance sheet date which demonstrates significant headroom both on
total facilities and covenants at all points during the period to
30 September 2024.
At the period end the Group had net current liabilities of
GBP34.6m (FY 2022: GBP115.3m). This is primarily driven by deferred
income of GBP61.0m and the nature of the Group's magazine business
where the profile of cash receipts from wholesalers is often ahead
of payment of certain magazine related costs. The Group has
consistently delivered adjusted free cash flow conversion of around
100% and is forecast to generate sufficient cash flows to meet its
liabilities as they fall due. The reduction in net current
liabilities since 30 September 2022 is primarily due to the
repayment of the term loan, with the existing UKEF and RCF
facilities all classed as non-current.
After due consideration, the Directors have concluded that there
is a reasonable expectation that the Group has adequate resources
to continue in operational existence for at least 12 months from
the date of this report. For this reason, the Directors continue to
adopt the going concern basis in preparing the consolidated
financial statements for the HY 2023 results.
Condensed consolidated interim financial statements
Consolidated income statement
for the six months ended 31 March 2023 (unaudited)
6 months to 6 months
31 March to
2023 31 March
2022
----------------------- ----- ------------ ----------
Note
GBPm GBPm
----------------------- ----- ------------ ----------
Revenue 1,2 404.7 404.3
Net operating expenses 3 (320.8) (315.9)
----------------------- ----- ------------ ----------
Operating profit 83.9 88.4
----------------------- ----- ------------ ----------
Net finance costs 7 (17.5) (7.4)
----------------------- ----- ------------ ----------
Profit before tax 1 66.4 81.0
Tax charge 8 (10.0) (17.7)
----------------------- ----- ------------ ----------
Profit for the period
attributable to
owners of the parent 56.4 63.3
----------------------- ----- ------------ ----------
Earnings per 15p Ordinary share
6 months to 6 months
31 March to
2023 31 March
2022
--------------------------- ----- ------------ ----------
Note Pence
Pence
--------------------------- ----- ------------ ----------
Basic earnings per share 10 46.9 52.5
Diluted earnings per share 10 46.7 51.7
--------------------------- ----- ------------ ----------
Consolidated statement of comprehensive income
for the six months ended 31 March 2023 (unaudited)
6 months to 6 months
31 March to
2023 31 March
GBPm 2022
GBPm
------------------------------------------ ------------ ----------
Profit for the period 56.4 63.3
------------------------------------------ ------------ ----------
Items that may be reclassified to the
consolidated income statement
------------------------------------------ ------------ ----------
Currency translation differences (50.1) 8.9
Cash flow hedge reserve 1.4 -
------------------------------------------ ------------ ----------
Other comprehensive (expense)/income for
the period (48.7) 8.9
------------------------------------------ ------------ ----------
Total comprehensive income for the period
attributable to
owners of the parent 7.7 72.2
------------------------------------------ ------------ ----------
Consolidated statement of changes in equity
for the six months ended 31 March 2023 (unaudited)
Issued Share Accumulated
share premium Merger Treasury Other exchange Retained Total
capital account reserve reserve reserves differences earnings equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------- --------- --------- ---------- ---------- ---------- ------------ ---------- ---------
Balance at 1
October
2022 18.1 197.0 581.9 (8.0) - 70.7 201.0 1,060.7
-------------- ------- --------- --------- ---------- ---------- ---------- ------------ ---------- ---------
Profit for the
period - - - - - - 56.4 56.4
-------------- ------- --------- --------- ---------- ---------- ---------- ------------ ---------- ---------
Currency
translation
differences - - - - (50.1) - (50.1)
Cash flow
hedge
reserve 16 - - - - 1.4 - - 1.4
-------------- ------- --------- --------- ---------- ---------- ---------- ------------ ---------- ---------
Other
comprehensive
expense for
the
period - - - - 1.4 (50.1) - (48.7)
-------------- ------- --------- --------- ---------- ---------- ---------- ------------ ---------- ---------
Total
comprehensive
income for
the
period - - - - 1.4 (50.1) 56.4 7.7
Share capital - - - - - - - -
issued
Acquisition of
own shares 16 - - - (7.8) - - - (7.8)
Share schemes
- Issue of
treasury
shares
to employees 16 - - - 3.7 - - (3.7) -
- Value of
employees'
services 6 - - - - - - 6.8 6.8
- Current tax
on options - - - - - - (0.1) (0.1)
- Deferred tax
on options - - - - - - (6.1) (6.1)
Dividends paid
to
shareholders - - - - - - (4.1) (4.1)
-------------- ------- --------- --------- ---------- ---------- ---------- ------------ ---------- ---------
Balance at 31
March
2023 18.1 197.0 581.9 (12.1) 1.4 20.6 250.2 1,057.1
-------------- ------- --------- --------- ---------- ---------- ---------- ------------ ---------- ---------
Balance at 1
October
2021 18.1 197.0 581.9 (7.6) - (10.1) 83.0 862.3
-------------- ------- --------- --------- ---------- ---------- ---------- ------------ ---------- ---------
Profit for the
period - - - - - - 63.3 63.3
-------------- ------- --------- --------- ---------- ---------- ---------- ------------ ---------- ---------
Currency
translation
differences - - - - - 8.9 - 8.9
-------------- ------- --------- --------- ---------- ---------- ---------- ------------ ---------- ---------
Other
comprehensive
income for
the
period - - - - - 8.9 - 8.9
-------------- ------- --------- --------- ---------- ---------- ---------- ------------ ---------- ---------
Total
comprehensive
income for
the
period - - - - - 8.9 63.3 72.2
Share schemes
- Issue of
treasury
shares
to employees 16 - - - 6.4 - - (6.4) -
- Value of
employees'
services 6 - - - - - - 6.3 6.3
- Current tax
on options - - - - - - 1.0 1.0
- Deferred tax
on options - - - - - - (7.2) (7.2)
Dividends paid
to
shareholders - - - - - - (3.4) (3.4)
-------------- ------- --------- --------- ---------- ---------- ---------- ------------ ---------- ---------
Balance at 31
March 2022 18.1 197.0 581.9 (1.2) - (1.2) 136.6 931.2
-------------- ------- --------- --------- ---------- ---------- ---------- ------------ ---------- ---------
Consolidated balance sheet
as at 31 March 2023 (unaudited)
31 March 31 March 30 September
2023 2022 2022
Note GBPm GBPm GBPm
----------------------------------------- ----- --------- --------- -------------
Assets
Non-current assets
Property, plant and equipment 37.5 52.6 53.0
Intangible assets - goodwill 11 1,047.3 940.5 1,069.6
Intangible assets - other 11 612.1 597.1 646.2
Financial asset - derivative 13 1.4 - -
----------------------------------------- ----- --------- --------- -------------
Total non-current assets 1,698.3 1,590.2 1,768.8
----------------------------------------- ----- --------- --------- -------------
Current assets
Inventories 1.8 1.2 1.2
Corporation tax recoverable 15.4 0.1 13.4
Deferred tax 3.8 - 5.1
Trade and other receivables 112.7 127.4 134.3
Cash and cash equivalents 30.8 25.0 29.2
Finance lease receivable 3.8 4.2 6.1
----------------------------------------- ----- --------- --------- -------------
Total current assets 168.3 157.9 189.3
----------------------------------------- ----- --------- --------- -------------
Total assets 1,866.6 1,748.1 1,958.1
----------------------------------------- ----- --------- --------- -------------
Equity and liabilities
Equity
Issued share capital 15 18.1 18.1 18.1
Share premium account 197.0 197.0 197.0
Merger reserve 581.9 581.9 581.9
Treasury reserve (12.1) (1.2) (8.0)
Other reserves 16 1.4 - -
Accumulated exchange differences 20.6 (1.2) 70.7
Retained earnings 250.2 136.6 201.0
----------------------------------------- ----- --------- --------- -------------
Total equity 1,057.1 931.2 1,060.7
----------------------------------------- ----- --------- --------- -------------
Non-current liabilities
Financial liabilities - interest-bearing
loans and borrowings 421.7 344.2 369.0
Lease liability due in more than one
year 42.4 52.2 55.8
Deferred tax 122.4 100.4 131.7
Provisions 14 7.6 12.8 21.4
Deferred income 12.5 11.2 14.9
----------------------------------------- ----- --------- --------- -------------
Total non-current liabilities 606.6 520.8 592.8
----------------------------------------- ----- --------- --------- -------------
Current liabilities
Financial liabilities - interest-bearing
loans and borrowings - 69.5 83.8
Trade and other payables 12 115.7 140.4 143.8
Deferred income 61.0 62.9 55.8
Corporation tax payable - 6.9 1.0
Lease liability due within one year 9.7 11.9 12.1
Deferred consideration 3.6 4.5 4.5
Contingent consideration 13,18 7.0 - -
Deferred tax 5.9 - 3.6
----------------------------------------- ----- --------- --------- -------------
Total current liabilities 202.9 296.1 304.6
----------------------------------------- ----- --------- --------- -------------
Total liabilities 809.5 816.9 897.4
----------------------------------------- ----- --------- --------- -------------
Total equity and liabilities 1,866.6 1,748.1 1,958.1
----------------------------------------- ----- --------- --------- -------------
Consolidated cash flow statement
for the six months ended 31 March 2023 (unaudited)
6 months 6 months
to to
31 March 31 March
2023 2022
GBPm GBPm
------------------------------------------------------ ---------- ----------
Cash flows from operating activities
Cash generated from operations 117.3 138.1
Interest paid (9.0) (5.1)
Interest paid on lease liabilities (1.3) (0.4)
Tax paid (20.7) (14.4)
------------------------------------------------------ ---------- ----------
Net cash generated from operating activities 86.3 118.2
------------------------------------------------------ ---------- ----------
Cash flows from investing activities
Purchase of property, plant and equipment (1.1) (1.7)
Purchase of computer software and website development (5.1) (4.5)
Purchase of subsidiary undertakings, net of cash
acquired (44.0) (14.6)
Net cash used in investing activities (50.2) (20.8)
------------------------------------------------------ ---------- ----------
Cash flows from financing activities
Acquisition of own shares for Employee Benefit
Trust (7.8) -
Drawdown of bank loans 250.1 -
Repayment of bank loans (256.0) (385.7)
Repayment of overdraft (4.2) (3.1)
Bank arrangement fees (5.6) (0.1)
Repayment of principal element of lease liabilities (3.1) (3.1)
Dividends paid (4.1) (3.4)
------------------------------------------------------ ---------- ----------
Net cash paid from financing activities (30.7) (395.4)
------------------------------------------------------ ---------- ----------
Net increase/(decrease) in cash and cash equivalents 5.4 (298.0)
Cash and cash equivalents at beginning of period 29.2 324.3
Exchange adjustments (3.8) (1.3)
------------------------------------------------------ ---------- ----------
Cash and cash equivalents at end of period 30.8 25.0
------------------------------------------------------ ---------- ----------
Notes to the consolidated cash flow statement
for the six months ended 31 March 2023 (unaudited)
A. Cash generated from operations
The reconciliation of profit for the period to cash generated
from operations is set out below:
6 months
to 6 months
31 March to 31 March
2023 2022
GBPm GBPm
---------------------------------------------------- ---------- -------------
Profit for the period 56.4 63.3
---------------------------------------------------- ---------- -------------
Adjustments for:
Depreciation 4.8 4.6
Impairment charge 2.4 6.3
Amortisation of intangible assets 37.1 36.3
Share schemes
- Value of employees' services 6.8 6.3
Finance costs 17.5 7.4
Tax charge 10.0 17.7
Cash generated before changes in working
capital and
provisions 135.0 141.9
---------------------------------------------------- ---------- -------------
Movement in provisions (12.5) 1.3
Increase in inventories (0.6) (0.1)
Decrease/(increase) in trade and other receivables 17.2 (6.2)
(Decrease)/increase in trade and other payables (21.8) 1.2
---------------------------------------------------- ---------- -------------
Cash generated from operations 117.3 138.1
---------------------------------------------------- ---------- -------------
B. Analysis of net debt
Other
30 September Cash On non-cash Exchange 31 March
2022 flows acquisition changes movements 2023
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- ------- ------------- ---------- ----------- ---------
Cash and cash equivalents 29.2 1.3 4.1 - (3.8) 30.8
Debt due within
one year (83.8) 83.7 - 0.1 - -
Debt due after more
than one year (369.0) (68.0) - (2.1) 17.4 (421.7)
---------------------------- -------- ------- ------------- ---------- ----------- ---------
Net debt (423.6) 17.0 4.1 (2.0) 13.6 (390.9)
---------------------------- -------- ------- ------------- ---------- ----------- ---------
C. Reconciliation of movement in net debt
6 months 6 months
to to
31 March 31 March
2023 2022
GBPm GBPm
-------------------------------------------------- ---------- ----------
Net debt at start of period (423.6) (176.3)
Increase/(decrease) in cash and cash equivalents 5.4 (298.0)
Net movement in borrowings 15.7 90.3
Other non-cash changes (2.0) (1.3)
Exchange movements 13.6 (3.4)
-------------------------------------------------- ---------- ----------
Net debt at end of period (390.9) (388.7)
-------------------------------------------------- ---------- ----------
Basis of preparation
The condensed consolidated interim financial statements for the
six-month period ended 31 March 2023 are unaudited but have been
subject to an independent review by the auditor. They do not
constitute statutory financial statements as defined in section 434
of the Companies Act 2006. The comparative figures are for the six
month period ended 31 March 2022.
This unaudited condensed consolidated interim financial
information for the six months ended 31 March 2023 has been
prepared in accordance with International Accounting Standard 34
Interim Financial Reporting in conformity with the requirements of
the Companies Act 2006, and in accordance with the Disclosure
Guidance and Transparency Rules of the Financial Conduct
Authority.
The interim financial information contained in the Interim
Report should be read in conjunction with the Annual Report for the
year ended 30 September 2022.
Having considered the Group's funding position and latest
forecasts, the Directors believe that there is a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, the
Directors continue to adopt the going concern basis in preparing
the condensed interim financial information.
As stated in the financial statements for the year ended 30
September 2022 the following amendments to existing standards have
been applied where applicable:
- amendment to IAS 1 Amendments regarding the classification of
liabilities and Amendments regarding the disclosure of accounting
policies;
- IAS 8 Amendments regarding the definition of accounting estimates;
- IAS 12 Amendments regarding deferred tax on leases and decommissioning obligations;
- IAS 16 Amendments prohibiting a company from deducting from
the cost of property, plant and equipment amounts received from
selling items produced while the company is preparing the asset for
its intended use;
- IAS 37 Amendments regarding the costs to include when
assessing whether a contract is onerous;
- IFRS 3 Amendments updating a reference to the Conceptual Framework;
- IFRS 9 Amendments relating to the fees in the '10 per cent'
test for derecognition of financial liabilities;
- IFRS 16 Amendments to clarify how a seller-lessee subsequently
measures sale and leaseback transactions; and
- Annual Improvements to IFRS Standards 2018-2020 Cycle.
The Group has entered into an interest rate swap in the period,
with the hedge accounting requirements of IFRS 9 Financial
instruments being applied. The effective portion of the derivative
is recognised in other comprehensive income and reclassified to
profit or loss when the qualifying asset, being the Group's
borrowings, impacts profit or loss.
The accounting policies adopted, methods of computation and
presentation are otherwise consistent with those set out in the
Group's statutory accounts for the financial year ended 30
September 2022.
There has been no material impact from the adoption of new
standards, amendments to standards or interpretations which are
relevant to the Group.
The Group's critical accounting judgments and other key sources
of estimation uncertainty remain the same as those set out in the
Group's Consolidated Financial Statements for the year ended 30
September 2022.
Presentation of non-statutory measures
The Directors believe that adjusted results and adjusted
earnings per share provide additional useful information on the
core operational performance of the Group to shareholders, and
review the results of the Group on an adjusted basis internally.
The term 'adjusted' is not a defined term under IFRS and may not
therefore be comparable with similarly titled profit measurements
reported by other companies. It is not intended to be a substitute
for, or superior to, IFRS measurements of profit.
During the period the Group has introduced a new Alternative
Performance Measure ('APM') - Acquisition and integration related
costs. Acquisitions are a key part of the Group's strategy and a
material amount of these costs are typically incurred, however the
timing and scale will vary year on year. Integration costs will
also vary depending on the scale and complexity of the acquisition
and may cross financial years. Splitting these costs out from the
broader category of exceptional items is intended to allow a user
of the financial statements to assess the impact of these
activities on our results. Costs which were included as exceptional
in the comparative period have been included within acquisition and
integration related costs on a consistent basis with the current
period.
Adjustments are made in respect of:
Share-based payments - share-based payment expenses (relating to
equity-settled share awards with vesting periods longer than 12
months), together with associated social security costs, are
excluded from the adjusted results of the Group as the Directors
believe they result in a level of charge that would distort the
user's view of the core trading performance of the Group.
Acquisition and integration related costs - although
acquisitions are a key part of the Group's strategy the Group
adjusts for costs relating to the completion and subsequent
integration of acquisitions, initiated within 12 months of the
acquisition date, as these costs are not related to the core
trading of the Group and not doing so would distort the Group's
results, so as to assist the user of the financial statements to
understand the results of the core underlying operations of the
Group. Details of acquisition and integration related costs are
shown in note 4.
Exceptional items - the Group considers items of income and
expense as exceptional and excludes them from the adjusted results
where the nature of the item, or its size, is material and/or is
not related to the core underlying trading of the Group so as to
assist the user of the financial statements to better understand
the results of the Group. Details of exceptional items are shown in
note 5.
Amortisation of acquired intangible assets - the amortisation
charge for those intangible assets recognised on business
combinations is excluded from the adjusted results of the Group
since they are non-cash charges arising from non-trading investment
activities. As such, they are not considered to be reflective of
the core trading performance of the Group.
Unwinding of discount on contingent consideration - the Group
excludes unwinding of the discount on contingent consideration from
the Group's adjusted results on the basis that it is non-cash and
the balance is driven by the Group's assessment of the relevant
discount rate to apply. Excluding this item ensures comparability
with prior periods.
The tax related to adjusting items is the tax effect of the
items above, calculated using the standard rate of corporation tax
in the relevant jurisdiction.
Reference to 'core' or 'underlying' reflects the trading results
of the Group without the impact of amortisation of acquired
intangible assets, acquisition and integration related costs,
exceptional items, share-based payment expenses (relating to
equity-settled share awards with vesting periods longer than 12
months), together with associated social security costs, unwinding
of discount on contingent consideration and any related tax
effects, that would otherwise distort the users understanding of
the Group's performance.
A summary table of all measures is included below:
Closest Definition
APM equivalent
statutory
measure
--------------- ---------------- ----------------------------------------------------
Adjusted Operating Adjusted operating profit represents earnings
operating profit before share-based payments (relating to
profit equity-settled awards with vesting periods
longer than 12 months) and related social
security costs, amortisation of acquired
intangible assets, acquisition and integration
related costs and exceptional items.
This is a key management incentive metric,
used within the Group's Deferred Annual Bonus
Plan.
Adjusted operating profit margin is adjusted
operating profit as a
percentage of revenue.
Adjusting items are shown in the table below
and defined in the commentary.
Adjusted Profit Adjusted profit before tax represents earnings
profit before before before share-based payments (relating to
tax tax equity-settled awards with vesting periods
longer than 12 months) and related social
security costs, interest, tax, amortisation
of acquired intangible assets, acquisition
and integration related costs, exceptional
items, unwinding of discount on contingent
consideration, and any related tax effects
Adjusting items are shown in the table below
and defined in the commentary.
Adjusted Diluted Adjusted diluted earnings per share (EPS)
diluted earnings represents adjusted profit after tax divided
earnings per share by the weighted average dilutive number of
per share shares at the year end date.
This is a key management incentive metric,
used within the Group's Performance Share
Plan.
A reconciliation is provided in note 10.
Adjusted Effective Adjusted effective tax rate is defined as
effective tax rate the effective tax rate adjusted for the tax
tax rate impact of adjusting items.
Adjusted Operating Adjusted operating cash flow represents cash
operating cash flow generated from operations adjusted to exclude
cash flow cash flows relating to acquisition and integration
costs, exceptional items and for payment
of employer's taxes on share-based payments
relating to equity settled share awards with
vesting periods longer than 12 months, and
to include lease repayments following the
adoption of IFRS 16 Leases.
Adjusted Free cash Adjusted free cash flow is defined as adjusted
free cash flow operating cash flow less capital expenditure.
flow Capital expenditure is defined as cash flows
relating to the purchase of property, plant
and equipment and purchase of computer software
and website development.
Net debt The aggregation Net debt is defined as the aggregate of the
of cash Group's cash and cash equivalents and its
and debt external bank borrowings net of capitalised
bank arrangement fees. It does not include
lease liabilities recognised following the
adoption of IFRS 16 Leases.
--------------- ---------------- ----------------------------------------------------
A reconciliation of adjusted operating profit to profit before
tax is shown below:
6 months 6 months
to to
31 March 31 March
2023 2022
GBPm GBPm
-------------------------------------------------- ---------- ----------
Adjusted operating profit 130.3 134.5
Adjusted net finance costs (17.2) (7.4)
Adjusted profit before tax 113.1 127.1
Adjusting items:
Share-based payments (including social
security costs) (7.0) (3.7)
Acquisition and integration related costs (note
4) (3.2) (10.6)
Exceptional items (note 5) (5.9) (1.6)
Amortisation of acquired intangibles (30.3) (30.2)
Unwinding of discount on contingent consideration (0.3) -
Profit before tax 66.4 81.0
-------------------------------------------------- ---------- ----------
A reconciliation of cash generated from operations to adjusted
free cash flow is shown below:
6 months 6 months
to to
31 March 31 March
2023 2022
GBPm GBPm
--------------------------------------------------- ---------- ----------
Cash generated from operations 117.3 138.1
Cash flows related to acquisition and integration
related costs 12.7 3.7
Cash flows related to exceptional items 8.9 3.5
Settlement of social security costs on share based
payments(1) 0.4 1.8
Lease payments (3.1) (3.1)
--------------------------------------------------- ---------- ----------
Adjusted operating cash inflow 136.2 144.0
Cash flows related to capital expenditure (6.2) (6.2)
--------------------------------------------------- ---------- ----------
Adjusted free cash flow 130.0 137.8
--------------------------------------------------- ---------- ----------
(1) Relating to equity-settled share awards with vesting periods
longer than 12 months.
A reconciliation between adjusted and statutory earnings per
share measures is shown in note 10.
Included below is a reconciliation between statutory revenue and
organic revenue:
6 months to 6 months to
31 March 31 March
2023 2022
GBPm GBPm
---------------------------- ------------ ------------
Total revenue 404.7 404.3
Revenue from HY 2023 and
HY 2022 acquisitions which
have not been acquired for
a full financial year (20.3) -
---------------------------- ------------ ------------
HY 2023 organic revenue 384.4 404.3
---------------------------- ------------ ------------
Impact of FX at constant
rates (0.5) 20.5
---------------------------- ------------ ------------
Organic revenue at constant
currency 383.9 424.8
---------------------------- ------------ ------------
In line with Group policy, in determining organic revenue for
the 6 months to 31 March 2023 acquisitions which have not been
acquired for a full financial year in either the current or prior
period have been excluded. As such, and for the purposes of
providing comparability period-on-period, the reconciliation of
organic revenue for the 6 months to 31 March 2022 has been
presented based on this definition.
Revenue from HY 2023 and HY 2022 acquisitions which have not
been acquired for a full financial year includes revenues from the
WhatCulture, Who What Wear, Shortlist, ActualTech and Gardening
Know How acquisitions.
Notes to the financial information
1. Segmental reporting
The Group is organised and arranged primarily by reportable
segment. The Executive Directors consider the performance of the
business from a geographical perspective, namely the UK and the US.
The Australian business is considered to be part of the UK segment
and is not reported separately due to its size. The Group also uses
a sub-segment split of Media (websites and events) and Magazines
for further analysis. The Group considers that the assets within
each geographical segment are exposed to the same risks.
(a) Reportable segment
(i) Segment revenue
6 months 6 months
to to
31 March 31 March
2023 2022
Sub-segment GBPm Sub-segment GBPm
--------- -------------------------- ---------- ------------------------------ ----------
Media Magazines Total Media Magazines Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------- --------- --------------- ---------- ----------- ----------------- ----------
Segment:
UK 138.8 99.1 237.9 138.6 111.3 249.9
US 126.7 40.1 166.8 120.0 34.4 154.4
--------- --------- --------------- ---------- ----------- ----------------- ----------
Total 265.5 139.2 404.7 258.6 145.7 404.3
--------- --------- --------------- ---------- ----------- ----------------- ----------
Transactions between segments are carried out at arm's
length.
(ii) Segment adjusted operating profit
6 months 6 months
to to
31 March 31 March
2023 2022
GBPm GBPm
------ ---------------- ------------- ----------- ---------------- ------------- -----------
Adjusted Adjusted
operating operating
profit prior Adjusted profit prior Adjusted
to intra-group Intra-group operating to intra-group Intra-group operating
adjustments adjustments profit adjustments adjustments profit
GBPm GBPm GBPm GBPm GBPm GBPm
------ ---------------- ------------- ----------- ---------------- ------------- -----------
UK 43.7 42.5 86.2 52.2 40.0 92.2
US 86.6 (42.5) 44.1 82.3 (40.0) 42.3
------ ---------------- ------------- ----------- ---------------- ------------- -----------
Total 130.3 - 130.3 134.5 - 134.5
------ ---------------- ------------- ----------- ---------------- ------------- -----------
A reconciliation of total segment adjusted operating profit to
profit before tax is provided as follows:
6 months 6 months
to to
31 March 31 March
2023 2022
GBPm GBPm
-------------------------------------------------- ---------- ----------
Adjusted operating profit 130.3 134.5
Adjusted net finance costs (note 7) (17.2) (7.4)
Adjusted profit before tax 113.1 127.1
Share-based payments (including social security
costs) (7.0) (3.7)
Amortisation of acquired intangibles (30.3) (30.2)
Unwinding of discount on contingent consideration (0.3) -
Acquisition and integration related costs
(note 4) (3.2) (10.6)
Exceptional items (note 5) (5.9) (1.6)
Profit before tax 66.4 81.0
-------------------------------------------------- ---------- ----------
2. Revenue
The table below disaggregates revenue according to the timing of
satisfaction of performance obligations:
6 months 6 months
to to
31 March 31 March
2023 2022
GBPm GBPm
-------------- ----- -------- ---------- ----- -------- ----------
Over Point in Total Over Point in Total
time time revenue time time revenue
GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ----- -------- ---------- ----- -------- ----------
Total revenue 8.0 396.7 404.7 7.6 396.7 404.3
-------------- ----- -------- ---------- ----- -------- ----------
See note 1 for disaggregation of revenue by geography.
3. Net operating expenses
Operating profit is stated after charging:
6 months
6 months to to 31
31 March March
2023 2022
GBPm GBPm
--------------------------------------- ------------ ---------
Cost of sales (209.3) (187.2)
Distribution expenses (21.2) (20.7)
Share-based payments (including social
security costs) (7.0) (3.7)
Acquisition and integration related
costs (note 4) (3.2) (10.6)
Exceptional items (note 5) (5.9) (1.6)
Depreciation (4.8) (4.6)
Amortisation (37.1) (36.3)
Other administration expenses (32.3) (51.2)
----------------------------------------- ------------ ---------
Total (320.8) (315.9)
----------------------------------------- ------------ ---------
4. Acquisition and integration related costs
6 months 6 months
to to
31 March 31 March
2023 2022
GBPm GBPm
-------------------------- ---------- ----------
Acquisition related costs 1.2 1.7
Onerous property costs 2.0 8.9
Total charge 3.2 10.6
-------------------------- ---------- ----------
Acquisition and integration related costs of GBP3.2m incurred in
the period reflect GBP1.2m of deal-related fees, GBP0.8m of
restructuring costs related to recent acquisitions and GBP2.0m
onerous property costs relating to acquired properties, net of
GBP0.8m released following settlement of a provision for historic
legal claims recognised on the Dennis opening balance sheet (HY
2022: GBP1.7m relating to the Dennis acquisition and GBP8.9m to
acquired onerous properties).
Further details in respect of the acquisitions are shown in note
18.
5. Exceptional items
6 months 6 months
to to
31 March 31 March
2023 2022
GBPm GBPm
----------------------- ---------- ----------
Restructuring costs 5.3 0.5
Onerous property costs 0.6 1.1
Total charge 5.9 1.6
----------------------- ---------- ----------
Exceptional costs incurred in the period include GBP5.3m
relating to restructuring costs (HY 2022: GBP0.5m) and GBP0.6m
relating to onerous properties (HY 2022: GBP1.1m).
6. Employee costs
6 months 6 months
to to
31 March 31 March
2023 2022
GBPm GBPm
------------------------------------------ ---------- ----------
Wages and salaries 84.5 84.7
Social security costs 8.1 4.9
Other pension costs 2.7 2.6
Share schemes
* Value of employees' services 6.8 6.3
Total employee costs 102.1 98.5
------------------------------------------ ---------- ----------
Wages and salaries in the table above include the all-employee
profit pool bonus in the comparative period.
IFRS 2 Share-based Payment requires an expense for equity
instruments granted to be recognised over the appropriate vesting
period, measured at their fair value at the date of grant.
The fair value has been calculated using the Monte Carlo and
Black-Scholes models, using the most appropriate model for each
scheme. Assumptions have been made in these models for expected
volatility, risk-free rates and dividend yields.
Key management personnel compensation
6 months 6 months
to to
31 March 31 March
2023 2022
GBPm GBPm
------------------------------------------------ ---------- ----------
Salaries and other short-term employee benefits 1.0 1.7
Share schemes
* Value of employees' services 1.5 1.3
Total employee costs 2.5 3.0
------------------------------------------------ ---------- ----------
Key management personnel are deemed to be the members of the
Board of Future plc.
7. Finance income and costs
6 months 6 months
to to
31 March 31 March
2023 2022
GBPm GBPm
-------------------------------------------------- ---------- ----------
Interest payable on interest-bearing loans and
borrowings (13.9) (5.2)
Amortisation of bank loan arrangement fees (2.0) (1.2)
Interest payable on lease liabilities (1.4) (1.0)
-------------------------------------------------- ---------- ----------
Adjusted finance costs (17.3) (7.4)
-------------------------------------------------- ---------- ----------
Unwinding of discount on contingent consideration (0.3) -
-------------------------------------------------- ---------- ----------
Total reported finance costs (17.6) -
-------------------------------------------------- ---------- ----------
Interest receivable on lease liabilities 0.1 -
Net finance costs (17.5) (7.4)
-------------------------------------------------- ---------- ----------
On 23 November 2022, the Group further extended its committed
debt facilities with a 5 year, GBP400m term facility partially
guaranteed by UK Export Finance. The facility, maturing November
2027, has a 12 month availability period and amortises from year 3.
It was secured at competitive market rates, on substantially
similar terms to, and with the same covenants as, the Groups
GBP500m Revolving Credit Facility ('RCF') which expires in June
2025 and has a 1 year extension option at lender consent. On
signing, the first GBP160m was utilised to prepay the Groups
previous Term Loan maturing 31 December 2023.
8. Tax on profit
The tax charge for the six months ended 31 March 2023 is based
on the effective tax rate, estimated on a full year basis, being
applied to the statutory profit for the six months ended 31 March
2023. The Group's adjusted effective tax rate is 23.9% (HY 2022:
21.6%).
The Group's statutory effective tax rate is 15.1% (HY 2022:
21.9%) with the difference between the statutory tax rate and
adjusted effective tax rate attributable to the tax effect of share
based payment charges which are recognised in equity.
Inclusive of this charge, the statutory effective tax rate is
24.4% (HY 2022: 29.5%).
9. Dividends
6 months 6 months
to to
31 March 31 March
Equity dividends 2023 2022
-------------------------------------------- ---------- ----------
Number of shares in issue at end of period
(million) 120.9 120.8
Dividends paid and payable in period (pence
per share) 3.4 2.8
Dividends paid in period (GBPm) (4.1) (3.4)
-------------------------------------------- ---------- ----------
Interim dividends are recognised in the period in which they are
paid and final dividends are recognised in the period in which they
are approved. The dividend in respect of the year ended 30
September 2022 was paid on 14 February 2023. The Board has not
proposed a dividend for the six months ended 31 March 2023.
10. Earnings per share
Basic earnings per share are calculated using the weighted
average number of Ordinary shares in issue during the year. Diluted
earnings per share have been calculated by taking into account the
dilutive effect of shares that would be issued on conversion into
Ordinary shares of awards held under employee share schemes.
Adjusted earnings per share remove the effect of share based
payments, acquisition and integration related costs (note 4),
exceptional items (note 5), amortisation of intangible assets
arising on business combinations, unwinding of discount on
contingent consideration, and any related tax effects from the
calculation.
6 months 6 months
to to
31 March 31 March
2023 2022
-------------------------------------------------- ----------- -----------
Adjustments to profit after tax:
Profit after tax (GBPm) 56.4 63.3
Share-based payments (including social security
costs) (GBPm) 7.0 3.7
Acquisition and integration related costs (GBPm) 3.2 10.6
Exceptional items (GBPm) 5.9 1.6
Amortisation of intangible assets arising on
acquisitions (GBPm) 30.3 30.2
Unwinding of discount on contingent consideration
(GBPm) 0.3 -
Tax effect of the above adjustments (GBPm) (17.0) (9.8)
Adjusted profit after tax (GBPm) 86.1 99.6
-------------------------------------------------- ----------- -----------
Weighted average number of shares in issue during
the period:
- Basic 120,146,502 120,504,929
- Dilutive effect of share options 714,468 1,939,825
- Diluted 120,860,970 122,444,754
Basic earnings per share (in pence) 46.9 52.5
Adjusted basic earnings per share (in pence) 71.7 82.7
Diluted earnings per share (in pence) 46.7 51.7
Adjusted diluted earnings per share (in pence) 71.2 81.3
-------------------------------------------------- ----------- -----------
The adjustments to profit after tax have the
following effect:
Basic earnings per share (pence) 46.9 52.5
Share-based payments (including social security
costs) (pence) 5.8 3.1
Acquisition and integration related costs (pence) 2.7 8.8
Exceptional items (pence) 4.9 1.3
Amortisation of intangible assets arising on
acquisitions (pence) 25.2 25.1
Unwinding of discount on contingent consideration
(pence) 0.2 -
Tax effect of the above adjustments (pence) (14.0) (8.1)
Adjusted basic earnings per share (pence) 71.7 82.7
-------------------------------------------------- ----------- -----------
Diluted earnings per share (pence) 46.7 51.7
Share-based payments (including social security
costs) (pence) 5.8 3.0
Acquisition and integration related costs (pence) 2.6 8.7
Exceptional items (pence) 4.9 1.3
Amortisation of intangible assets arising on
acquisitions (pence) 25.1 24.7
Unwinding of discount on contingent consideration
(pence) 0.2 -
Tax effect of the above adjustments (pence) (14.1) (8.1)
Adjusted diluted earnings per share (pence) 71.2 81.3
-------------------------------------------------- ----------- -----------
11. Intangible assets
Other
Publishing Customer acquired
Goodwill rights Brands relationships Subscribers intangibles Other Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- --------- ----------- ------- --------------- ------------ ------------- ------ -------
Cost
At 1 October
2021 951.2 90.4 349.7 54.5 15.2 42.6 46.0 1,549.6
Additions through
business combinations 302.6 - 128.4 - 62.0 19.1 1.7 513.8
Other additions - - - - - - 9.0 9.0
Exchange adjustments 86.4 0.5 23.5 3.3 9.2 4.7 2.5 130.1
---------------------- --------- ----------- ------- --------------- ------------ ------------- ------ -------
At 30 September
2022 1,340.2 90.9 501.6 57.8 86.4 66.4 59.2 2,202.5
---------------------- --------- ----------- ------- --------------- ------------ ------------- ------ -------
Additions through
business combinations 29.1 - 10.5 7.4 - 2.0 - 49.0
Other additions - - - - - - 5.1 5.1
Exchange adjustments (56.2) (0.3) (17.5) (2.0) (5.5) (3.8) (1.8) (87.1)
---------------------- --------- ----------- ------- --------------- ------------ ------------- ------ -------
At 31 March
2023 1,313.1 90.6 494.6 63.2 80.9 64.6 62.5 2,169.5
---------------------- --------- ----------- ------- --------------- ------------ ------------- ------ -------
Accumulated
amortisation
and impairment
At 1 October
2021 (263.0) (22.0) (31.4) (13.6) (5.7) (27.1) (32.1) (394.9)
Charge for the
period - (7.5) (27.4) (7.8) (9.4) (6.2) (13.0) (71.3)
Exchange adjustments (7.6) (0.4) (4.3) (1.3) (2.0) (2.8) (2.1) (20.5)
---------------------- --------- ----------- ------- --------------- ------------ ------------- ------ -------
At 30 September
2022 (270.6) (29.9) (63.1) (22.7) (17.1) (36.1) (47.2) (486.7)
---------------------- --------- ----------- ------- --------------- ------------ ------------- ------ -------
Charge for the
period - (3.4) (14.4) (4.3) (4.9) (3.3) (6.8) (37.1)
Exchange adjustments 4.8 0.3 3.3 0.9 1.4 1.5 1.5 13.7
---------------------- --------- ----------- ------- --------------- ------------ ------------- ------ -------
At 31 March
2023 (265.8) (33.0) (74.2) (26.1) (20.6) (37.9) (52.5) (510.1)
---------------------- --------- ----------- ------- --------------- ------------ ------------- ------ -------
Net book value
at 31 March 2023 1,047.3 57.6 420.4 37.1 60.3 26.7 10.0 1,659.4
---------------------- --------- ----------- ------- --------------- ------------ ------------- ------ -------
Net book value
at 30 September
2022 1,069.6 61.0 438.5 35.1 69.3 30.3 12.0 1,715.8
---------------------- --------- ----------- ------- --------------- ------------ ------------- ------ -------
Useful economic 5-15 3-20 8-10 7-11 3-15 2
lives years years years years years years
---------------------- --------- ----------- ------- --------------- ------------ ------------- ------ -------
The other acquired intangibles category in the table above
includes assets relating to customer lists, content and
websites.
Any residual amount arising as a result of the purchase
consideration being in excess of the value of acquired assets is
recorded as goodwill.
Further details regarding the intangible assets acquired during
the period through business combinations are set out in note
18.
Other intangibles relate to capitalised software costs and
website development costs which are internally generated.
Amortisation is included within administration expenses in the
consolidated income statement.
12. Trade and other payables
31 March 30 September
2023 2022
GBPm GBPm
----------------------------------- --------- -------------
Trade payables 21.6 28.8
Other taxation and social security 5.4 5.1
Other payables 11.5 7.2
Accruals 77.2 102.7
Total 115.7 143.8
----------------------------------- --------- -------------
13. Financial instruments
The following table presents the Group's financial assets and
liabilities that are measured at fair value at 31 March 2023:
31 March 2023 30 September 2022
Level 2 Level Level 2 Level 3
Fair value 3 Fair value Fair value
GBPm Fair value GBPm GBPm
GBPm
------------------------------ ------------ ------------ ------------ ------------
Assets
Financial asset - derivative 1.4 - - -
------------------------------ ------------ ------------ ------------ ------------
Liabilities
Contingent consideration - 7.0 - -
Total 1.4 7.0 - -
------------------------------ ------------ ------------ ------------ ------------
A derivative interest rate swap for GBP150m was acquired in
March 2023 in order to hedge the Group's exposure to interest rate
fluctuations. The swap is at an interest rate of 3.72% and expires
on 24 March 2026. The swap has been valued based on the present
value of the estimated future cash flows based on observable yield
curves. An asset of GBP1.4m has been recognised on the balance
sheet at 31 March 2023 with a corresponding increase in the cash
flow hedge reserve (see note 16).
The contingent consideration of GBP7.0m (30 September 2022:
GBPnil) relates to the acquisition of ActualTech LLC ("ActualTech")
(see note 18 for further details).
The ActualTech contingent consideration has been valued using a
scenario-based approach drawing from internal projections and
forecasts. The outcome is then discounted to reflect the market
risk related to contingent consideration and underlying achievement
of the gross profit target. The discount rate of 13% was determined
using a Capital Asset Pricing Model (CAPM) approach.
The main level 3 inputs used in valuing the contingent
consideration are gross profit and the discount rate, as shown in
the table below:
ActualTech,
Assumption LLC
-------------- ---------------
Discount rate 13%
Gross profit $10.1m - $15.1m
--------------- ---------------
The table below sets out the sensitivity of level 3 inputs to a
10% change in the assumptions, which is considered to be a
reasonably possible alternative assumption:
Increase/(decrease) Increase/(decrease)
in liability
Assumption GBPm
-------------- -------------------- --------------------
Discount rate 10% (0.1)
Discount rate (10)% 0.1
Gross profit 10% 3.1
Gross profit (10)% (3.7)
-------------- -------------------- --------------------
There were no transfers between levels in the current or prior
period.
14. Provisions
31 March 30 September
2023 2022
GBPm GBPm
--------- --------- -------------
Property 6.8 9.1
Other 0.8 12.3
Total 7.6 21.4
--------- --------- -------------
The provision for property relates to dilapidations and
obligations under short leasehold agreements on vacant property.
The majority of the vacant property provision is expected to be
utilised over the next three years. The reduction in other
provisions is primarily due to payment of GBP8.9m for settlement of
the provision for historic legal claims recognised on the Dennis
opening balance sheet.
15. Issued share capital
During the period no shares were issued by the Company pursuant
to share scheme exercises throughout the period (31 March 2022:
165,891 Ordinary shares with a nominal value of GBP24,884). 2,095
Ordinary shares were issued under the Share Incentive Plan for a
combined total cash commitment of GBPnil.
As at 31 March 2023 there were 120,858,025 Ordinary shares in
issue (31 March 2022: 120,791,225; 30 September 2022:
120,855,930).
16. Reserves
Treasury reserve
The treasury reserve represents the cost of shares in Future plc
purchased in the market and held by the Employee Benefit Trust
('EBT') to satisfy awards made by the trustees.
During the period 233,587 (31 March 2022: 365,505) of the shares
held by the EBT were used to satisfy the vesting of share options
and 625,000 (31 March 2022: 22,216) shares were purchased to fund
the future vesting of share options at a total value of
GBP7.8m.
Merger reserve
During the current and comparative period there was no movement
on the merger reserve.
Accumulated exchange differences
The reserve for accumulated exchange differences comprises the
revaluation of the Group's foreign currency entities, principally
the US and Australia, on consolidation.
Other reserves
Other reserves comprises the cash flow hedge reserve, as the
Group entered into an interest rate swap in March 2023, in order to
hedge against fluctuations in interest rates. The cash flow hedge
reserve represents the cumulative amount of gains and losses on the
interest rate swap deemed effective.
17. Contingent liabilities
There were no material contingent assets or liabilities as at 31
March 2023 (31 March 2022: GBPnil).
18. Acquisitions
Acquisition of Shortlist
On 18 October 2022, Future completed the acquisition of
ShortList Media Limited (trading as Shortlist.com), a technology
website, for consideration of GBP0.2m.
Acquisition of ActualTech LLC
On 30 November 2022 the Group acquired ActualTech LLC, a
provider of content marketing solutions for B2B marketers, for
initial cash consideration of GBP32.2m. In addition, a further
variable deferred consideration up to a total value of $24 million
could be paid, subject to meeting certain financial targets based
on the 12 month period ending 31 December 2023. The table below
includes GBP6.9m ($8.3m) as contingent consideration, which
represents its fair value at the date of acquisition. At the
reporting date, the fair value of the contingent consideration had
increased to GBP7.0m ($8.7m) due to the impact of discounting. 100%
of the voting equity interest was acquired.
The impact of the acquisition on the consolidated balance sheet
was:
Fair value
GBPm
------------------------------ -----------
Intangible assets
- Brand 3.4
- Customer relationships 7.4
- Database 0.3
- Software 0.5
Cash and cash equivalents 3.3
Trade and other receivables 1.4
Trade and other payables (0.6)
------------------------------ -----------
Net assets acquired 15.7
------------------------------ -----------
Goodwill 23.4
------------------------------ -----------
39.1
------------------------------ -----------
Consideration:
Cash 32.2
Contingent consideration 6.9
------------------------------ -----------
Total consideration 39.1
------------------------------ -----------
ActualTech specialises in webinars, white papers, syndication
and content marketing on owned platforms. The acquisition further
diversifies the Group by strengthening its position in the B2B
vertical and provides greater scale and reach in North America to
further monetise its highly-valuable B2B audience. In addition, the
Group will be leveraging ActualTech's webinar capabilities and its
US expertise within the Group's existing portfolio.
Goodwill is attributable to the opportunities associated with
future returns from new customer relationships. The intangibles
recognised, including goodwill, are expected to be deductible for
tax purposes.
Included within the Group's results for the period are revenues
of GBP4.5m and a profit before tax of GBP1.6m from ActualTech
(excluding acquired intangible amortisation).
If the acquisition had been completed on the first day of the
financial year, it would have contributed GBP6.6m of revenue and a
profit before tax of GBP2.4m (excluding acquired intangible
amortisation) during the period.
Gross trade receivables were GBP1.4m on acquisition, of which
GBP1.4m were expected to be recovered.
Acquisition of Gardening Know How
On 7 February 2023, the Group acquired Gardening Know How, a
specialist interest site for gardening based in the US, for total
consideration of GBP14.8m. The Gardening Know How acquisition
brings additional expertise to the Group, strengthening the Group's
strategic Homes vertical. 100% of the voting equity interest was
acquired.
The provisional impact of the acquisition on the consolidated
balance sheet was:
Provisional
fair value
GBPm
============================== ------------
Intangible assets
- Brand 7.1
- Content 1.2
Cash and cash equivalents 0.8
Trade and other receivables 0.3
Trade and other payables (0.1)
============================== ------------
Net assets acquired 9.3
------------------------------ ------------
Goodwill 5.5
------------------------------ ------------
14.8
------------------------------ ------------
Consideration:
Cash 14.8
------------------------------ ------------
Total consideration 14.8
------------------------------ ------------
Goodwill is attributable to future premium advertising
relationships and new evergreen content. The intangibles
recognised, including goodwill, are expected to be deductible for
tax purposes.
Included within the Group's results for the period are revenues
of GBP0.4m and a profit before tax of GBP0.1m from Gardening Know
How (excluding acquired intangible amortisation).
If the acquisition had been completed on the first day of the
financial year, it would have contributed GBP1.2m of revenue and a
profit before tax of GBP0.3m (excluding acquired intangible
amortisation) during the period.
Gross trade receivables were GBP0.3m on acquisition, of which
GBP0.3m were expected to be recovered.
The fair values included for the Gardening Know How acquisition
are described as 'provisional' as the acquisition occurred within
one month of the balance sheet date and so further time is required
in order to fully ascertain the fair value of assets and
liabilities acquired, which will be completed upon finalisation of
the completion accounts.
19. Post balance sheet events
Interest rate swap
Following the period end, an additional GBP50m interest rate
swap was entered into with Lloyds Bank, to further hedge the
Group's exposure to fluctuations in interest rates. The swap is at
an interest rate of 4.03% and expires on 3 April 2026, giving the
Group a blended fixed rate of 3.83% and a 47:53 fixed:floating
ratio.
Disposal of titles
On 28 April the Group disposed of The Shooting Times &
Country, Sporting Gun, www.shootinguk.co.uk and The Shooting Show
for total consideration of GBP0.2m, of which GBP0.1m is deferred
for 12 months.
Statement of Directors' responsibilities
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting in conformity
with the requirements of the Companies Act 2006;
-- the interim management report includes a fair review of the
information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
A list of current Directors is maintained on the Future plc
website, www.futureplc.com
By order of the Board
Directors
Richard Huntingford
Independent Non-Executive Chairman
Jon Steinberg
Chief Executive Officer
Penny Ladkin-Brand
Chief Financial and Strategy Officer
Hugo Drayton
Senior Independent Non-Executive
Alan Newman
Independent Non-Executive
Rob Hattrell
Independent Non-Executive
Meredith Amdur
Independent Non-Executive
Mark Brooker
Independent Non-Executive
Angela Seymour-Jackson
Independent Non-Executive
17 May 2023
The maintenance and integrity of the Future plc website is the
responsibility of the Directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
INDEPENT REVIEW REPORT TO FUTURE PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 March 2023 which comprises the consolidated
income statement, consolidated balance sheet, the consolidated
statement of changes in equity, the consolidated cash flow
statement and related notes 1 to 19. We have read the other
information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the
condensed set of financial statements in the half-yearly
financial report for the six months
ended 31 March 2023 is not prepared, in all material respects,
in accordance with United
Kingdom adopted International Accounting Standard 34 and the
Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom (ISRE (UK) 2410). A review of interim financial
information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in the Basis of preparation note, the annual
financial statements of the Group will be prepared in accordance
with United Kingdom adopted international accounting standards. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim
Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in
accordance with ISRE (UK)
2410; however future events or conditions may cause the entity
to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the
group's ability to continue as a going concern, disclosing as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are
responsible for expressing to the company a conclusion on the
condensed set of financial statements in the half-yearly financial
report. Our Conclusion, including our Conclusion Relating to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our review
work, for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
Reading, United Kingdom
17 May 2023
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END
IR BCGDUUSBDGXR
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